CHICAGO (CN) - Several labor unions sued the Municipal Employees' Annuity and Benefit Fund of Chicago and its board in Cook County on Tuesday, seeking a declaration that a law to change their retirement benefits violates the Illinois constitution.
Public Act 98-0641, proposed by Chicago mayor Rahm Emanuel and signed into law by Gov. Pat Quinn earlier this year, reduces the amount of automatic annuity increases for both current and retired employees' pensions - and raises the amounts current employees contribute to the fund.
The changes would affect both the MEABF, who funds the pensions for city employees like healthcare workers, librarians, teacher's aides and foodservice and clerical workers, and the Laborers and Retirement Board Employees' Annuity and Benefit Fund (LABF).
According to the unions, the act - which takes effect on Jan. 1 - should be declared "unconstitutional, void and unenforceable" since the Pension Protection Clause in the Illinois Constitution provides that no pension or retirement benefits for public employees can be diminished or impaired.
Courts in Illinois have already struck down other pension measures. In July, the state Supreme Court ruled that requiring retired public school teachers to contribute to their health insurance premiums violated the constitution, and last month a judge in Sangamon County also chose the Pension Protection Clause over the state's reform bill.
The unions say the act is "much more than a legal question."
"At base, this case concerns an ethical and moral promise to provide a certain level of retirement security for the women and men who chose public service," the complaint states. "For many of these individuals, their pensions comprise their life savings and are all that stands between them and poverty. The city of Chicago does not participate in Social Security, and as a result most city retirees receive no social security benefits from their city employment."
The average MEABF retiree receives a $33,000 annuity per year. And the unions say that while they have contributed large amounts to the pension fund, Chicago paid in the bare minimum knowing that it would not be enough.
"These amounts were systematically less than actuarial reports provided by the MEABF indicated were needed to meet future pension benefit obligations," the unions say in their complaint. "The pension funds were treated, essentially, as a piggy bank used to finance other things. But rather than take responsibility for this deliberate underfunding, the elected officials responsible for the passage of Public Act 98-0641 would place squarely the purported remedy for the problem on the backs of plaintiffs."
This left MEABF only 37.2 percent funded currently according to the unions, who say their suit aims to protect the benefits promised to city workers when they "dedicated their careers to the men, women and children of the City of Chicago."
The plaintiffs are represented by Freeborn & Peters.
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